Buyers may not be aware that there is actually a conventional mortgage product that may be available for buyers with less money down than a FHA mortgage.  See the comparison below:

FHA vs. Conventional

• Purchase price of $200,000
• Interest rate of 3.25%                                                                                                                   3.625%
• Down Payment of 3.5%                                                                                                                3.000%
• Base loan amount of $193,000
• Loan amount                                                                                                                                    $194,000
• Total loan amount w/1.75% upfront mortgage insurance $196,377                       $194,000
• Monthly mortgage insurance factor 1.25%                                                                           .74%
• Estimated principal and interest payment $1,053.86                                                     $1,004.37

In comparison, the monthly payment difference would be approximately $49.49.

The above scenario is based on a credit score of 740, rates will vary by credit score.  If you have a credit score over 700 you might want to consider a 3% down conventional loan over a FHA loan.  If your credit score is under 700, then you will want to consider a FHA mortgage since with the conventional loan the minimum credit score is 700.

Word on the street is that the cost of doing an FHA loan in 2013 is going to increase!  Contact Johnny Lane of Stonegate Mortgage or the lender of your choice for more detailed information about this comparison or to get your own pre-approval letter.

The above example does not include taxes and insurance and is for demonstration only.